The streaming wars will end ‘with 3 or 4 winners,’ analyst predicts
Competition in the streaming space is increasingly getting fierce, with more providers vying for subscribers at a time when signs of saturation in the market are starting to emerge.
With the streaming market expected to "significantly cool" over the next five years, according to PwC’s annual Global Entertainment & Media Outlook, streamers are being forced to adapt to a rapidly changing landscape.
"As the streaming wars continue, we will end up with three or four winners," Needham Analyst Laura Martin said on Yahoo Finance Live (video above). "That means everybody else gets bought or they go out of business. Those are the two choices."
Martin, assessing the landscape based on resources, assets, and management, named those likely winners as Amazon (AMZN), Disney (DIS), Apple (AAPL), and Warner Bros. Discovery (WBD).
“Absolutely Amazon Prime," she said. "Unlimited resources, ability to bundle, never need to make money in streaming."
Disney (which owns Hulu), Martin said, is the "best-in-class" marketer among all the streaming platforms. In terms of Apple and Warner Bros. Discovery (which includes HBO Max), both companies have "very interesting assets and best-in-class management.”
'Netflix sees the writing on the wall'
One name is notably absent on her list — Netflix (NFLX). The original streaming platform is starting to show signs of slowing, with its latest earnings results showing it lost more than a million subscribers last quarter.
"Netflix has none of the assets required to survive as a standalone streaming service," Martin said. "It doesn't have live sports. It doesn't have news. It doesn't have affiliations around the world. It doesn't have sister subsidiaries that it can bundle with, nor does it have sister subsidiaries that make all the money like Google Search, so it can just lose money indefinitely."
Last month, Netflix opted to partner with Microsoft (MSFT) on a new ad-supported tier, which Martin said could be a subtle path towards potentially be acquired by the tech giant.
"I think Netflix sees the writing on the wall and is trying to figure out an exit plan here," Martin said. "And there are not that many companies large enough to buy Netflix, but Microsoft is one of them, and they have a good relationship because the CEO of Netflix was on the board of Microsoft."
And if Microsoft does end up buying Netflix, she added, the software company becomes a "winner" because of how big they are.
“They have everything they need to compete with the Apple and Amazon standards," Martin said. "Otherwise, I think Netflix loses.”
Seana Smith is an anchor with Yahoo Finance. Follow her on Twitter at @SeanaNSmith.
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